Author

Penni McLean-Conner
is the chief customer
offcer at Eversource
Energy, the largest
energy delivery company in Ne w England. A
registered professional
engineer, McLean-Conner is active in the
utility industry serving
on several boards of
directors including CS
Week and the American
Council for an Energy
Effcient Economy. Her
latest book, “Energy Effciency: Principles and
Practices,” is available
at http://pennwell-books.com. Reach her
at penelope.conner@
eversource.com.

Arrears management programs
(AMPs) can provide a win-win solution
for customers, utilities and regulatory
agencies. My previous columns on this
topic have explored arrears management
programs from a business case and
framework perspective. This final
column explores the best practices in
arrears management programs.

AMPs are financial assistance
programs for low-income customers
with overdue utility bills. The basic
concept is that customers enrolled in an
AMP who make the required affordable
payments are rewarded by having their
arrears forgiven.

Utilities considering offering an
arrears management program are wise
to work with low-income advocates
and regulators in their states to design
a program that works toward customer,
utility and stakeholder goals. This final
article explores some best practices in
the design of an arrears management
program in the areas of offering
comprehensive, flexible and efficient
programs.

Provide Consumers aComprehensive Approach

Offering a comprehensive solution that
includes discount rates along with
energy efficiency for income-eligible
customers is a winning design.
Energy efficiency programs are
powerful tools that can help reduce
monthly usage and therefore monthly
bills. Add to that discount rates
for income-eligible customers and
consumers are much better positioned
to provide needed support to make
the bills affordable.

To provide this comprehensive
solution, the best practice is a partnership
of utility administration along with
community action programs (CAP).

Utilities are in the best position toenroll customers. CAP agenciesprovide consumers with fuel assistanceenrollment, along with consumereducation and financial counseling.This combination of service deliveryprovides customers with the bestopportunity to use energy wisely and,in addition, be able to make requiredmonthly payments.

Customer Payment BestPractices Flexibility

Utilities considering AMP programs
must determine how to handle situations
where the customer misses a payment
or completes the program only to
build up an arrearage again. These
decisions require thoughtful analysis and
consideration.

Allowing customers to enroll
in an AMP a second time is a more
complicated issue. There are valid
reasons where customers could really
benefit from the opportunity to enroll
a second time, such as experiencing
an unexpected illness or loss of a
job. There is concern, though, that a
program allowing a second enrollment
might create the behavior of building
up an arrears knowing it can be
forgiven. The National Consumer Law
Center recommends utilities use their
discretion aided by information from a
CAP regarding a client’s circumstances
as to whether to offer a second AMP.

Determining how to handle missed
payments is another consideration.
Massachusetts utilities that have run
AMP programs for years have found
that allowing customers to make up
missed payments during an active AMP
plan is positive and efficient.

Efficiency Opportunities

Leveraging technology and businessrules to simplify the AMP process bothfor customers and the utility makesbusiness sense. Automatic enrollmentand short duration forgiveness are twoitems that utilities should consider inthe design.

In designing an AMP program,
utilities must evaluate whether customers
must request to be on an AMP or
whether they will leverage automatic
enrollment. Data from Massachusetts,
in which both automatic and customer
requested designs were in place, show
that more customers participate with
automatic enrollment, but the percentage
that completes the plan is reduced. With
automatic enrollment, though, the utility
will gain operational efficiencies on
customer enrollment processes. Manual
enrollment based on a customer’s request
provides additional opportunity for a
utility to screen the customer and provide
valuable information and education on
the program to help ensure the customer
is a good fit for the program.

During program design, utilities
should consider forgiving the arrearages
in a short cycle time, such as one year.
Customers are more motivated to
make payments on a shorter plan. In
addition, it helps customers complete
the program.

This series has explored arrears
management programs that with the
appropriate regulatory structure can
provide win-win solutions for both
utilities and their customers. As utilities
consider offering these programs, they
must focus on designing a program that
is grounded in meeting customer and
stakeholder desires while also making
sense from a utility perspective.